Black Pearl Group Limited Analysis

Overview

Blackpearl Group is a technology company that builds, acquires, and markets data-driven cloud services, consisting of a suite of productivity and demand generation applications for small and medium-sized businesses (SMB).

Blackpearl Group’s proprietary private platform, the Pearl Engine, is the cornerstone of organic growth for both built and acquired technologies. Through leveraging elements or entire components from the Pearl Engine, companies within the Group can access new markets, increase their value proposition, and improve their cost-to-revenue ratio faster and at near zero marginal cost.

Blackpearl Group's first applications focus on the number one business tool in the world today, email. Transforming it from a transactional tool into a demand-generation tool to help SMBs grow their revenue and build stronger relationships with their customers.

Founded in 2012, Blackpearl Group is driven from Wellington, New Zealand, and Phoenix, Arizona.

Performance

The following information was extracted from Blackpearl Group's full year results, released 30 May 2024:

KEY FINANCIAL HIGHLIGHTS:

• Subscription Revenue: $4.1m, marking a 183% year-on-year increase.
• Group ARR: Reached $7.4m reflecting a 177% year-on-year increase.
• Pearl Diver Product ARR: $4.9m only 13 months after launch.
• ARR Per Employee: Recorded at $230k exhibiting a 359% year-on-year increase.
• Gross Profit Margin: Increased to 71% for FY24 from 49% in FY23.
• Expenses: Increased 21% year-on-year, however declined as a percentage of revenue to 130% in FY24 from 297% in FY23.
• Cash Burn 3 month Average: Ended the year at $340k, a 42% decrease from its peak during the year.
• Revenue Churn: 4.0% as of March 31, 2024.

SUMMARY:

FY24 reflects our strategic investments and disciplined execution significantly advancing BPG's growth and profitability.

Pearl Diver, our flagship product, has fundamentally transformed our revenue composition, becoming the largest contributor to our Annual Recurring Revenue (ARR). Within just one year, Pearl Diver's ARR grew from $54k to $4.9m, now representing 67% of our total ARR. This rapid growth underscores the effectiveness of our go-to-market strategy and our commitment to serving the SME market in the USA and will drive us towards our short-term target of $10m in ARR.

Our gross margin increased substantially, rising to 71% in FY24 from 49% in FY23, driven by the scalability of our platform and the higher margin of the Pearl Diver product. While expenses have grown to support our expansion, it's noteworthy that expenses as a percentage of ARR have decreased to 130% in FY24 from 297% in FY23.

Over FY24 we have reduced our 3 month average cash burn to $340k from $588k at its peak. Our approach to managing cashflows was characterised by balancing a drive to recurring cash profitability, while maintaining aggressive growth.